I’m buying a new car, so I decided to look at my credit report. Um, it doesn’t look so great. How do I fix my credit?

Joan

It will take some time.

We all expressly hope that the reason our credit score is so low is because a mistake was made on our report. After all, if it was a mistake then we aren’t responsible, and won’t have to go through the slow, costly, and slightly embarrassing process that is paying off old debts. But the truth is that if you want to make your credit report look better to lenders, you’re going to have to face up and fix it. How do you fix it? Like this.

What you owe. It’s obvious that if you have huge debts that are way overdue and have gone to collection agencies, the only way to fix your credit report is to pay those off. However, many people don’t realize that paying the minimum payment on their credit card every month does nothing good for their credit. If you max out your credit, it makes you look bad, because it makes you look like you don’t have any money–just credit. So if you have any cards near the limit, stop spending and start paying.

Keep your hands off new deals. Practically everything big that we buy today involves a credit check if it’s done in payments, from furniture to computers to cars. If you buy a lot of stuff on installments though, then it looks bad on your credit report because people are constantly checking your credit, and that isn’t good.

Not using it? Then you don’t need it. If you have too many accounts open, that also doesn’t reflect well on you. If you have too much credit, then that looks bad. You don’t need a wallet full of cards with ten thousand dollar limits. Don’t fall into the trap of closing all or most of your accounts, though–you do need something on your report, and it needs to be something that you use well.

Stick with your older stuff first. Say you just got your first credit card and you’re thrilled because now you’re building credit. Don’t jump and go apply for a dozen more. What looks best on your credit report is not only that you have credit, but that you’ve had it for awhile and have done well with it. So stick with that one card for awhile and take care of it before getting something new.